In this second episode about innovation at large companies, I wish to talk about a fresh analysis on “large firms and the growth of start-up cultures” developed by Steven Klepper (recipient of 2011 Global Award for Entrepreneurship Research). It is part of an interview conducted by Haydn Shaughnessy, editor at innovationmanagement.se.
Steven based his outputs on the study of 50 new industries over the long term, autos, TV, mainly in the US. In a nutshell, Steven’s argument is as follows:
- As employees get frustrated by the unability of large companies to see what they develop internally, they leave and start their own company .
- These spin-offs tend to be exemplary performers and so, create successful innovative clusters.
- Thus large companies give involuntary birth to innovation clusters, and clusters like Silicon valley grow out of dysfonction.
Markets become dominated by few firms because of their success in innovation, and exploiting windows of opportunity with big outputs. Steven Klepper makes no concession to large companies leaders and their ability to keep innovation alive:
- “The problem in companies lies with the ability of those in power to evaluate ideas. But the great thing about capitalism is that it allows and facilitates you to leave your company”.
- “What is striking is how conservative these companies have become. Looking at these behemoths, nobody really owns them. A CEO would have to mobilise the owners… would he take the risk?“
Similarly, innovation practioner Jeffrey Philipps complains about the lack of vision at large co, having lost their initial clear and compelling goal over time; this lost prevents them now from innovating: no vision = no innovation.
Though I think “the involuntary birthing process” sounds perfectly logical, a few comments come to my mind:
- The Silicon Valley growth out of dysfonction doesn’t seem systematic: Apple, Google and more recently Facebook were started right away by ex-students, entrepreneurs who had the idea in mind from the start to create their own company; “What make Silicon Valley so special about innovation” article shows the importance of the culture foundation: “Silicon Valley has a culture of constant rebellion against all sorts of establishments, a profound desire to have a major impact on the world who needs to be changed to be a better place“.
- What seem to me be good levers to boost start-up clusters are venture capitalists to fund the disruption, and universities to provide skilled engineers and designers. Large companies are not only providers of start-up initiators, they can enable a netwotk of start-up to get a first living, by corporate ventures, open innovation partnership, and prime contracts. As a result, I would talk of a network of positive factors to foster innovation and entrepreneurship clusters.
Innovative companies are constantly obsoleting themselves tells us Vijay Govindarajan but some firms do learn and adapt to shifting environmental contexts. There are been sustained initiatives demonstrated by innovation champions like 3M, Procter&Gamble, Gore, Renault, Decathlon, Cisco, Apple, Google, Fuji-Xerox, Canon, Honda, … Some companies out-innovate their peers year after year: Jaruzelski and Dehoff have classified them in need seekers, market readers, and technology drivers, with big, consistent winners in all camps. Gary Hamel also distinguishes innovators archetypes in the following taxonomy: tyros, nobel laureates, artistes, cyborgs, born again.
Out-innovators not only develop innovative products, they often bring innovation management one step further with creative approaches. Some champions cases are reviewed in my “Rapid innovation” presentation.
Based on these experiences, I’ve completed a sum-up of their innovation toolbox according to 3 categories, Methodology, Organization, and Culture; it’s actually very synthetic but most of the tools are linked to more comprehensive articles describing them; once you find something that sparks you, you can go more in-depth clicking the link:
Methodology to manage innovation:
- “rugby” approach, cross functional project management and team leadership;
- “knowledge creating company” (metaphor, analogy, and model);
- innovation market and open innovation;
- design thinking, user-led innovation, fast prototyping and iteration;
- new product development and process streamlining, fast product development, portfolio management, focus;
- ecosystem thinking and “leadership platform”, business model innovation.
Organization designed for innovation:
- from linear model to interactive model, innovation from everyone everywhere vs ambidextrous organization vs dedicated entity (a dedicated team, not an isolated team; skunk works, official and unofficial);
- small and autonomous entities rule (“small is beautiful“);
- “connect and develop” model;
- corporate venture and accelerator innovation program;
- rapid innovation model and corresponding user guide;
- “lab to market” channel;
Culture for innovation:
- spread innovation or dedicated team;
- creative tension;
- open innovation (again);
- culture of cooperation and trust;
- culture of diversity and openness;
- risk-taking culture;
- idea improvement program (innovation idea helpers, office of innovation, center for creativity and innovation);
- Business Plan Competition, innovation tournaments, 72-hour IdeaJams, knowledge reuse, and Global’s Idea Hub (Web 2.0 as an innovation pathway);
- creation empowerment (“3M Bootleg rule” = 15% free time to personal innovation, “invitation to cannibalize your products“, similar to 20% rule at Google), cocreation and crowdsourcing innovation;
- change management linked to innovation acceptance.
My own experience to generate innovation relies on being able to work in an ecosystem of competencies linked to your field: it enables you to shape a team of gifted and bold professionals, across the boundaries of your companies. Fun and success of innovation derive from a collective adventure, not from egocasting.
Another lesson for growing your innovation is to define the balance between speed and identity: you will probably find more agility in starting your own company. But increased competition and current innovation trends lead to disruptive products, where new objects emerge, with hybrid identities: an iPhone is not a phone anymore! Frontiers become fuzzy, innovation requires new approach to produce actual genuine ideas, such as structured creativity and innovative design (C-K theory, designing the unknown).
The most appropriate corporate framework is the one which will provide you with a market of innovators and the ability to combine rapid approach with innovative design, so as to build a strong identity, an identity “to last”.